Year-over-Year Drop Continues for Online Ad Prices
By David Feldman at 2 February, 2009, 5:05 am
It appears that the online advertising industry may not be as ‘recession proof’ as hoped for by industry experts. Last month, PubMatic, an ad revenue optimization company that works with over 5,500 online publishers, unveiled the PubMatic AdPrice Index for Q4 2008, a quarterly industry-wide measure of online ad network pricing for publishers.
The data reflected in the AdPrice Index shows a significant decline in Q4 2008 online display ad pricing compared to Q4 2007 for all sizes of websites and all vertical categories, underscoring the fact that the U.S. economy is in a recession and that the online advertising sector is not immune to it. However, there are signs of promise for the online advertising sector, demonstrating plenty of opportunities for advertisers, publishers and ad networks.
Data Findings from Q4 2008:
- All sizes of websites (small, medium, and large) were down dramatically from Q4 2007; small, medium, and large sites dropped 52%, 23%, and 54%, respectively, from the previous year.
- All sizes of websites were down from Q3 2008 to Q4 2008, but the drops leveled-off, bucking the trend of larger drops from quarter to quarter throughout 2008; this may be an indicator that the online ad sector received enough of a boost from holiday advertising to keep ad rates steady.
- All vertical categories experienced significant drops in their ad pricing from Q4 2007; the biggest drop by a vertical was Business & Finance, which fell from an average price of $2.13 in Q4 2007 to $0.83 in Q4 2008 – a 61% drop.
- No vertical categories dropped by a significant amount from Q3 2008 to Q4 2008, with some verticals even improving from the previous quarter — the Technology, Sports, Entertainment, Gaming, and Music verticals all had higher ad price averages in Q4 of 2008 than in Q3 of 2008.
“Online ad pricing is a reflection of what is happening in the overall economy, and as a result, pricing has dropped significantly in almost all categories in the past year,” said Rajeev Goel, Co-founder and CEO of PubMatic. “However, with overall advertising budgets shrinking, the need for marketers to have more accountable advertising could bring more advertising dollars online in 2009 and start an upward trend as some vertical categories have already experienced.” My message: save all your dollars for advertising on the reverse merger blog!
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